This Is Only a Test: DHMC, Affiliate Hospitals to Consolidate Lab Services

Stacy Gassett, a medical lab technician, uses a microscope to view a urine analysis in the Valley Regional Hospital's lab in Claremont, N.H., on Dec. 10, 2013. Within the next year, Valley Regional, along with Mt. Ascutney and New London Hospitals, will be sending non-emergency lab tests to DHMC, a cost cutting measure that will eliminate some jobs.
Valley News - Sarah Priestap

Lebanon — Three Upper Valley hospitals will outsource most of their lab work to Dartmouth-Hitchcock Medical Center in a pilot project that could save them hundreds of thousands of dollars each but may also mean cutting staff.

Mt. Ascutney Hospital in Windsor, Valley Regional Hospital in Claremont and New London Hospital have agreed to send routine outpatient lab services — which comprise about three-quarters of all lab work done at the hospitals — to Dartmouth-Hitchcock starting sometime next spring or summer.

The hospitals will retain their surgical pathology arrangements and continue to perform “stat” lab work that needs to be done immediately.

Otherwise, Dartmouth-Hitchcock will serve as a kind of regional hub for routine lab work in the Upper Valley.

The new model should not delay lab test results and patients should notice no difference, hospital officials said. But it could save a lot of money spent on equipment, materials and staff.

“This is a good thing,” said Peter Wright, CEO of Valley Regional. “This is going to help us reduce health care costs.”

Valley Regional figures to save about $500,000, Wright said, and the other two hospitals expect to shave several hundred thousand dollars from their budgets.

Most of the savings will come from lower spending on equipment and reagents, the substances mixed with bodily fluids in the lab tests.

Each of the community hospitals also may eliminate a couple of staff positions.

The arrangement is yet another way in which smaller hospitals are coordinating with Dartmouth-Hitchcock and each other as they adjust to a changing environment for health care providers.

All three are part of the New England Alliance for Health, a group of community hospitals, behavioral health centers, and home health care agencies in New Hampshire, Vermont and Massachusetts that share knowledge and resources.

New London began a formal affiliation with Dartmouth-Hitchcock in October to share some staff and resources. And all three hospitals have management services agreements with Dartmouth-Hitchcock, which means that their CEOs are technically Dartmouth-Hitchcock employees who are then leased back to the community hospitals.

Mt. Ascutney CEO Kevin Donovan said this project was a sign of the times in health care and yet another step toward a system in which hospitals collaborate rather than compete for patients.

“The new day of health care is that people need to learn to cooperate and work together to serve their communities better,” Donovan said.

Patients will not notice a difference, officials said. They will still go to their community hospital to have their blood drawn, get billed by that same hospital and it will all take about the same amount of time to receive the results. In fact, the hospitals already send labs to Dartmouth-Hitchcock, just not as many as they soon will.

Beyond the cost savings, the real impact will be on lab employees, who could have their hours cut or lose their jobs.

Each of the sending hospitals expects to shed the equivalent of at least one full time employee, and probably more.

Rumors have circulated for a while around Valley Regional that this change might happen, said Jeanne McBride, Valley Regional’s lab technical coordinator. Although employees understand that the hospital needs to cut expenses, they are still anxious about what this means for themselves.

“We do want to figure out a way to save money, but of course people don’t want to lose their jobs,” McBride said.

Donovan, Wright and New London CEO Bruce King said they hoped to avoid layoffs and instead cut hours through attrition or moving staff into other roles.

“We’re not envisioning that we’re going to need to lay off people,” King said. “But we are going to save in terms of the hours spent working.”

Dartmouth-Hitchcock does not need to hire additional employees to do this work, according to Michael Harhen, the administrative director for Dartmouth-Hitchcock’s lab.

Currently, Dartmouth-Hitchcock handles around 3 million lab tests per year, and this arrangement will increase that volume by 5 to 7 percent, Harhen said. It will mean additional revenue for Dartmouth-Hitchcock, but the extra money won’t be a windfall, he said. Rather, the real goal is controlling lab costs throughout the region.

“We’re not looking at it as a way to make money,” Harhen said. “It’s working together collaboratively.”

Officials at the smaller hospitals said this arrangement would keep down the prices they charge to patients, and a Dartmouth-Hitchcock spokesman said he did not expect lab costs to increase at Dartmouth-Hitchcock Medical Center.

“We’re not trying to corner the market,” said Dartmouth-Hitchcock spokesman Mike Barwell. “The object is to reduce costs.”